Unicaja and Liberbank agree to their merger

The Unicaja and Liberbank boards of directors, meeting in an extraordinary way this afternoon, have approved their merger. They will create the fifth largest bank by assets in Spain: they will reach 108,000 million euros with the more than 62,000 million that Unicaja contributes and the almost 47,000 that Liberbank incorporates. In this way they surpass Bankinter, which is relegated to sixth place, with its 96.8 billion euros in assets.

In accordance with the relevant event sent to the National Securities Market Commission at seven in the afternoon this Tuesday, the proposed exchange rate is one newly issued Unicaja share with a par value of one euro for every 2.7705 Liberbank shares with a par value of two euro cents each. In the document, Unicaja appears as the “absorbing company” and Liberbank, as the “absorbed entity”.

The operation will imply that Unicaja will have to carry out a capital increase for a total maximum nominal amount of 1,075 million euros. Although this amount could vary depending on the Liberbank treasury stock or the Liberbank shares that Unicaja may have at the time the merger is executed.

The common merger project is expected to be submitted to the approval of the general shareholders’ meetings of Unicaja Banco and Liberbank, which will be held, according to the entities, foreseeably during the first quarter of 2021. Once the operation has been approved in these bodies and once the mandatory administrative authorizations have been obtained, Unicaja will acquire by universal succession all the rights and obligations of Liberbank. This means that the operation will be implemented through the absorption of Liberbank by Unicaja, with the extinction of the former and the transfer en bloc of all its assets to the latter. Hence, Liberbank shareholders will receive Unicaja Banco shares in exchange.

In accordance with the calendar communicated to the CNMV, The merger is scheduled to be completed late in the second quarter or early in the third quarter of next year.

The merger agreement also includes the agreement finally reached regarding one of the issues that generated the most harshness during the negotiations: The current president of the Unicaja board of directors, Manuel Azuaga, will maintain the presidency of the new entity. Meanwhile, Manuel Menéndez, current CEO of Liberbank, will take on this same role on the board of directors of the bank resulting from the merger. In any case, the document states, within a maximum period of two years from the full effectiveness of the merger with its registration, the board of directors will modify Unicaja’s governance model -that will be the name of the new entity- so that the chairmanship of the board becomes non-executive and the functions of the CEO are adapted. Likewise, Will “reassess” the CEO. This means that the decision on who will occupy the first executive position of the new entity is delayed to 2023.

Likewise, the board of directors will be made up of fifteen members: seven proprietary directors (four representing Unicaja and three proposed by Liberbank), six independent directors (four proposed by Unicaja and two by Liberbank) and two executive directors, Azuaga and Menéndez.

If in assets the entity resulting from the merger will be the fifth largest in the Spanish market; It will also occupy that position in the deposit ranking; while in gross credit to customers it will be the sixth. Furthermore, from a commercial point of view, the integration of Unicaja and Liberbank will allow the combined entity to expand its presence to 80% of the Spanish territory.

The entities indicate that the overlap will be reduced in the geographical areas in which they are present today and where both have a great historical roots. According to its figures, this complementarity in the branch network and in the area of ​​operation of both entities will allow the new bank to have leading market shares in at least four autonomous communities.

Despite the latter, these entities do not rule out possible job cuts. They are placed at a time after the execution of the merger to analyze their overlaps, duplications and economies of scale, since for the moment no decision has been made in relation to the labor-related measures that will be necessary to adopt to proceed with the integration of templates as a result of the merger.


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